Publicis-Omnicon Deal Creates Largest Advertiser in the World

The two large ad companies are combining to be the largest advertising firm in the world.

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Among the many prominent companies the advertising firms represent are Volkswagen, McDonald's and Procter & Gamble.

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You may have never heard of Publicis or Omnicon, but that doesn't mean you've never seen their work. The companies are two of the largest advertising firms in the world and are about to join forces.

The merger would create the Publicis Omnicon Group, the largest advertiser in the world as measured by revenues. As of 2012, the two groups together had $22.7 billion in revenue. The merger would boost the two companies past WPP, currently the No. 1 advertiser globally, with $16.5 billion in 2012 revenue, according to data compiled by Ad Age.

Among the many prominent companies the advertising firms represent are McDonald's, Procter & Gamble and Volkswagen.

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The merger isn't just about gaining market share; according to Publicis Groupe CEO Maurice Levy, it's about keeping up with technology, particularly the massive amounts of consumer data that are now at companies' disposal.

"The communication and marketing landscape has undergone dramatic changes in recent years including the exponential development of new media giants, the explosion of Big Data, blurring of the roles of all players and profound changes in consumer behavior," he said in a released statement.

Any merger comes with organizational hurdles to overcome and the two companies have already solved leadership issues. According to a press release announcing the deal, Levy and Omnicom CEO John Wren will serve as co-CEOs for 30 months, after which Wren will remain as sole CEO while Levy becomes non-executive chairman of the board. That board will be evenly split, consisting of both CEOs, as well as seven non-executive directors from each company.

As with many mergers, there will be some streamlining. The press release said the company expected to realize $500 million in "efficiencies" from the merger, which could mean employee cuts. Together, the companies have 130,000 workers, but a merger could mean trimming workers to reduce duplicated effort. However, mergers also often mean fat-trimming in other areas, like eliminating excess office space and equipment. The CEOs have insisted that they intend to have minimal layoffs, according to Businessweek.

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One other potential stumbling block is the portfolio of rival companies the two firms will hold together. The two companies have client lists that include competitors like Coke and Pepsi; Apple, Blackberry, and Samsung; and American Express and Visa. While that might promise awkwardness, Wren insisted Monday that the companies' top clients were "extremely positive" about the deal, according to Reuters.

Publicis and Omnicon each own several ad agencies and public relations firms. Avoiding client clashes will likely be a function of keeping those large clients in separate companies.

"We're going to work extremely hard to resolve any client conflict issues with creative solutions," said Wren, as quoted by Reuters.

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